Tesla’s price cuts and bloating inventory levels nearly pushed Scott Painter’s startup Autonomy Inc. to wind up. Painter is the founder of multiple automotive companies, including auto-fintech startup Fair, used-car retailer TrueCar and auto-shopping platform CarsDirect.
Painter’s new venture planned to buy EVs from Tesla, General Motors, and Volkswagen, collectively worth $1.2 billion, reported Automotive News. The start-up would then offer subscription models to buyers, with options like the Tesla Model 3 and Chevrolet Bolt EV. Customers would choose from short-term rentals to multi-year leases or loans.
But Autonomy's fleet value plummeted after Tesla dropped the prices of its models across the globe, triggering a price war and causing turmoil in markets like China. “Instead of having an $85 million fleet, we suddenly had a, say, $56M to $57M fleet in one day,” he said in an interview.
As a consequence, the start-up underwent a forbearance process while Painter looked for solutions for the survival of his company. He raised $12M and had to cut down operating costs, including reducing the workforce from 120 to just 45 employees.
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Moreover, Autonomy had to rethink its business strategy. Initially, the start-up planned to buy 23,000 EVs from 17 automakers. Since then, the company changed its goalposts. Currently, it has around 1300 cars. The CEO estimates that the company would require roughly 3000 models to recover costs.
As per the latest reports on dealer inventory levels, EV supply appears to outpace demand. US car dealers had an average weekly inventory of 90,000 EVs in Q2 2023, a 342 percent rise over the same quarter in 2022.
The price drops are also significant – a 2023 Tesla Model 3 rear-wheel drive, which had a starting price of $43,000 earlier this year, now starts at $40,240. Factor in the tax breaks, and the effective price is $34,380. The base RWD model with 18-inch wheels from the inventory carries a sticker price of $39,180, as of July 12, 2023.
The discounts are also fuelling sales, as Tesla garnered record-breaking deliveries over two consecutive quarters this year.
Source: Automotive News